What to make of Argentine President-elect Javier Milei’s U.S. visit

Argentine President-elect Javier Milei traveled to the U.S. this week, where he had lunch with former President Bill Clinton, and is set to meet National Security Advisor Jake Sullivan.

Milei, a political outsider who has been described as “Argentina’s Donald Trump,” has vowed to put his nation’s turbulent economy through “shock therapy.” The self-described libertarian’s win earlier this month could mean massive reforms to Argentina’s government, including the gutting of the central bank and possible dollarization of the economy.

Among Milei’s stateside meetings is an in-person visit with Kristalina Georgieva, chief of the International Monetary Fund. The pair met virtually last week — which Georgieva described as a “very constructive engagement, very serious discussion,” Reuters reported. Argentina may put forward an application to receive financing via the IMF’s Resilience and Sustainability Trust, a fund which helps middle- and low-income countries access affordable financing options. The IMF is reportedly “very keen” to support Argentina, Reuters notes.

The incoming president’s plan to dollarize the economy is risky. Some analysts have warned that it could rapidly deflate the economy, which has been in a state of upheaval for years. But Argentina is already inextricably linked to the U.S. dollar, as residents try to navigate ever-changing inflation rates and high fees. To get around the peso’s fluctuation, some in Argentina have been exchanging their pesos for the more stable dollar, The New York Times reports.

If Argentina sticks to the peso, Milei still faces an uphill battle in controlling the currency. Presently, the country is grappling with several official exchange rates, and the official rate significantly devalues the peso against the dollar. “To normalise the currency system, Mr Milei needs to devalue the official exchange rate, which will probably reach an equilibrium between the official rate and the black-market one,” The Economist writes. “Only then could he lift capital controls, to avoid a run on the peso.”

With a staffing shakeup, Milei appeared to be taking a more moderate approach to his bold campaign proposal of dollarization, the Buenos Aires Times reported last week. He “distanced himself from his dollarisation guru Emilio Ocampo,” the Times reported, after earlier insisting that Ocampo would lead the country’s central bank which Milei has vowed to close. While the president-elect hasn’t officially confirmed key members of his economic team, Milei’s pick of two former Wall Street veterans shows that even though he “will bring change, it might not be as radical a change as espoused during his campaign,” one analyst told the Times.